Blue Owl, a private credit firm that has faced recent challenges in the sector, is aiming to significantly expand its involvement in the insurance industry to access a growing source of long-term capital. The company’s co-chief executive, Doug Ostrover, outlined these plans during the Private Capital Summit in London, emphasizing the firm’s intent to increase the amount of insurance capital under its management as part of a broader strategy to diversify and grow.

Ostrover acknowledged that Blue Owl currently manages a relatively small portion of insurance assets compared to larger competitors such as Blackstone, despite holding a minority stake in Kuvare, an insurance asset management firm. To support this expansion, Blue Owl has recently brought on insurance specialist Deva Mishra. The company’s approach contrasts with some rivals that have pursued growth by acquiring insurance businesses outright; Blue Owl prefers a “balance-sheet-light” strategy rather than making direct insurer acquisitions, as seen in cases like Apollo’s purchase of Athene and KKR’s investment in an insurance business.

This strategic shift comes amid ongoing consolidation in the private capital industry, where institutional investors increasingly favour allocating funds to a smaller number of larger general partners (GPs). Ostrover noted that large allocators are concentrating capital among fewer managers, putting pressure on mid-market private equity firms that lack specialist expertise, which may face merger or decline.

Despite recent difficulties in private credit markets—including concerns about rising default risks and significant redemptions by wealthy individual investors—Ostrover expressed measured optimism about the sector’s outlook. Blue Owl’s exposure to software companies that could be impacted by advances in artificial intelligence has contributed to a roughly 40 percent drop in its share price over the past year. However, Ostrover suggested there is a gap between market perceptions and the actual performance of underlying loans, stating that credit quality remains robust. Looking ahead, he indicated confidence that portfolios could continue to perform well over the next 12 to 18 months, while not entirely dismissing the possibility of increased defaults.

Overall, Blue Owl’s push into insurance represents an effort to secure more stable, long-term capital sources and strengthen its market position amid evolving industry dynamics and investor preferences.